Let’s change the discussion just a bit. Assuming debt other than a mortgage (so now there are no real tax implications, only inflation) where do you think the interest rate decision point is.

My opinion is to still compare your debt interest to prevailing debt rates (is it cheap money compared to what else is available?), how does inflation affect the rate (cheaper future dollars point again) and can I out perform the debt rates with the investment opportunity that is competing for this money.

Without the tax advantage, I’m more inclined to pay off the debt, i.e. lower tolerance for high debt interest.

I haven’t done any math on it…yet, but my gut feel is that 6% or higher on the debt and I’d be giving serious thought to paying off the loans.

Jeff

I say IF because if you are looking at only investing in CD’s to Mutual Funds, then your 10% range is probably spot on.

BTW: the only links allowed in posts are relevant links to specific articles etc. … if relevant these CAN be on your own blog.

I’m not spring loaded to pay that debt down and would rather invest than pre-pay. Same argument would stand for a low interest student loan. I’m guessing, but I bet Scott has a couple of these that he factors into his decision making.

Now on the other hand if interest rates on my debt were in the area of say 7-10% (which still isn’t as high as some folks have on their consumer credit cards), I’d be a bit more inclined to pay down the debt rather than invest.

AJC hits this debt paydown point above and calls it an investment as well, however, I view it more as a cost avoidance vice investment. But that’s probably a small dogs vs. puppies point.

[link removed]

But, BradOK’s question was a simple one: what’s the BEST use of his money. From a financial perspective, that’s by putting it into the investment that provides the highest return.

@ Scott – Working ONLY 40 hours a week; that’s a luxury that doctors and entrepreneurs can’t afford

Unfortunately for those who feel this way, they will probably have to continue to work 40 hours per week the rest of their lives.

This post is just clearly demonstrating the fasted possible way toward building the largest investment portfolio you possibly can, in the shortest amount of given time, regardless of a persons risk aversion or comfort zones.

The average person works 40 hours a week, and frankly they will not have the time to research this

I think the short answer is pay off the debt since it requires no homework or additional skills.

I did both: paid off debt and invested and saved, everyone personality towards money is different. There is no one size fits all in the world of personal finance

It depends of his risk level and money style

Some people are conservative and some are aggresive